Now that cash-back portals have reduced payouts on purchases of American Express gift cards from 1.5-2.2% down to 1% or less, I have tried to figure out if it’s worth it for me to continue to buy them on a regular basis.
The cornerstone of my points and miles accumulation has been to spend a lot of money on my credit cards. I buy them to meet the minimum spend to earn bonuses on new cards. I also buy them to earn extra miles on cards that give me extra miles on spend; for example the United Club card that gives 1.5 United miles per dollar of spend. I use the tried and true strategy of AMEX gift card—->VISA gift card——>Bluebird——>pay credit card. I usually start the process by buying the AMEX gift cards using the TopCashBack portal. In years past, cash back has been as high as 3%. It was at 2% for quite a while, and then dropped down to 1.5% earlier this year. There is a cost to buy the VISA gift cards, and the cash back helps to offset this cost. When cash back is 1.5% or greater, you can make a little more than your costs to liquidate.
Several cash-back portals, including my go-to site TopCashBack, have recently changed their terms. They will not pay cash back on gift cards that are more than $200. This is terrible because there is a $3.95 fee on each card. Before the cutback, I was buying one $2000 AMEX gift card a week, with a $3.95 fee. To do the same spend with the new rules, I would have to buy 10 cards and pay $3.95 x 10 = $39.50. The $30.00 cash back won’t cover my activation fees on the purchase of the VISA gift cards, plus imagine the hassle of buying the VISAs using $200 AMEX gift cards.
In the past I have used Ebates for cash back on VISA gift cards, but I haven’t used them since they stopped payouts on the VISAs. They continue to give cash back on the $2000 AMEX gift cards, but the payout is only 1%. Is it worth it?
The purchase of one $2000 gift card made through Ebates will cost $2003.95. When I buy 4 $500 VISA gift cards, the activation cost is $4.94 x 4 = $19.76. So my total costs are $3.95 + $19.76 = $23.71. I will get (if they pay out) $20 from Ebates. So my total cost in this cycle is 3.71.
If I am using a 2% cashback card, my profit per cycle is $36.29. If I use my United Club card I will get 3000 United miles per cycle at a cost per mile is 0.123 cents. Since I value United miles at least 1.5 cent each, I will gladly absorb the costs of manufacturing points at 0.123 cents a piece.
Assuming that I get paid out by Ebates, and that I can continue to buy VISA gift cards using the AMEX gift cards, AND I can continue to load Bluebird with the VISAs, I will continue on this course. Of course, it would be wonderful if AMEX decides that it needs to increase the payouts to the portals, and we can go back to life as we know it with the 1.5-2% payouts.